Venezia: Are dock fees hurting home values?

Aug. 22, 2013

Updated 9:54 p.m.

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Seymour Beek, a boat and dock owner at Balboa Island in Newport Beach, talks about how he was against most of the city proposal to change dock fees, in particular the part changing the fee rate to a per square foot rate, during the public input portion of a special council meeting in November. STEVEN GEORGES, FOR THE REGISTER

Seymour Beek, a boat and dock owner at Balboa Island in Newport Beach, talks about how he was against most of the city proposal to change dock fees, in particular the part changing the fee rate to a per square foot rate, during the public input portion of a special council meeting in November. STEVEN GEORGES, FOR THE REGISTER

I recently read a press release from Stop the Dock Tax Chairman Bob McCaffrey stating that the new dock taxes – as he calls them – are “Stealing our equity.”

McCaffrey says homes with docks on the bay could be worth $500,000 to $1 million or more than homes without docks.

With the city establishing a yearly permit that it can change or cancel at any time, “The owner no longer has any rights to the dock that they paid for and the equity they paid for at purchase,” he wrote.

When I asked Newport Beach City Manager Dave Kiff about this, he said people still own their docks and took exception to McCaffrey’s statement.

“There’s always been annual dock fees with an annual permit -- what’s changed now is the fees themselves, how they are calculated, and that the city for the first time ever mailed out permits to people to keep for their records,” Kiff said.

But are the new fees affecting home sales?

McCaffrey says yes.

“We have already seen a case of a bay front in escrow to close for almost $5,000,000, until the buyer reviewed the Dock Tax Permit and subsequently reduced the offer to $4,200,000,” he wrote.

“The buyer quickly surmised that the dock is no longer the property of the upland owner and counter-offered accordingly.”

On the flip side, are the new fees actually helping sales of homes in areas like Promontory Bay, around Linda Isle, portions of Bayside Drive and along Dover shores where no fees apply?

This was especially of interest to me since my husband and I decided to sell our home on Promontory Bay, which now has no dock fees.

But did the City Council have an inkling these new fees would affect home values?

Councilman Ed Selich also lives on Promontory Bay. He recused himself from council discussions early on in this process, he said, to avoid any conflict of interest should the outcome benefit him in any way.

I asked several Realtors I know in the area their opinions of how dock fees were affecting waterfront home sales, and if clients were asking about them.

George Schroeder with Prudential California says he hasn’t found buyers very concerned about the fees.

“They are concerned about how large a boat the parcel can accommodate, the location, is there tidal surge, eel grass, etc.," Schroeder said.

Adrienne Brandes of Surterre Properties tells me buyers are asking about the fees and sellers are upset about it.

“Although the homes that are affected are high priced, the nickel and diming of fees is what irritates the dock owners; they already pay the high property taxes and the waterways are used by all,” she says.

That being said, Brandes doesn’t believe the new fees preclude folks from buying where they want to live.

Brad Packard of Allied Residential Group says since the fees are so new, he’s finding most buyers are initially unaware of them.

“Once informed, there is a definite hesitation, but that is usually remedied via negotiation of a lower sales price with the seller,” he said. “Perceived property values are definitely the silent victim here for many of the current residents.”

Conversely, waterfront homes in unaffected areas have made those areas a bit more attractive to future owners, he told me.

My Realtor, Paul Fuchs of Surterre Properties, says his clients are asking about the fees.

He puts it in a different perspective, saying the dock fees affect a buyer in the same way any surcharge would.

“If a property is in an area that has a significantly higher tax rate, or excessive HOA fees or most pertinently Mello Roos taxes, it dissuades people from buying,” he said.

Fuchs also cautions these fees and taxes limits the supply of buyers, thus causing less demand and lower prices for those homes.

In the long run I’m not sure how drastically fees will affect waterfront home sales.

I do think all the publicity the Stop the Dock folks have generated is scaring some buyers, so they’ve kind of shot themselves in the foot here as far as their home values.

Realtors agreed buyers are confused about the fees.

The city rushed this process initially and did a poor job explaining the issue.

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